UK residents affected by fracking could receive cash payments

UK prime minister Theresa May has said some tax proceeds from shale gas development in Britain could go directly to local residents affected by the projects.

The plan is an attempt to alleviate local opposition to fracking projects that has consistently hampered the industry for years.

Britain is estimated to have substantial amounts of shale gas trapped in underground rocks, yet fracking applications have struggled to find approval from local communities concerned about noise and environmental impacts.

Last year, then chancellor of the exchequer George Osborne said the government would create a shale wealth fund that would receive up to 10 per cent of tax revenue from shale gas developments for investments in communities affected by the projects.

May, who took over as prime minister last month in the wake of Britain's 23 June vote to leave the European Union, said she wanted to look at the option of this money being paid directly to residents rather than to local authorities.

"The government I lead will be always be driven by the interests of the many, ordinary families for whom life is harder than many people in politics realise," May said.

"This announcement is an example of putting those principles into action. It's about making sure people personally benefit from economic decisions that are taken, not just councils, and putting them back in control over their lives."

The government said the new fund could deliver up to £10m per eligible community. It did not say how much each household could receive, but local media reported it could be as much as £13,000 in some areas.

Only one shale gas well near Blackpool, in Lancashire, has so far been fracked in Britain but was later abandoned when some of the work undertaken triggered an earth tremor. That resulted in an 18 month ban on the hydraulic fracturing technology used to extract gas from shale rock.

But carbon capture was abandoned by the UK last year due to the high initial cost of setting it up although the National Audit Office, Whitehall's spending watchdog recently said that its removal could increase the costs of climate change overall.

In May, Third Energy received the first planning approval for a shale gas fracking well since 2011. It says it will start hydraulic fracturing at its Kirby Misperton site in North Yorkshire in northeast England before the end of the year.

The British pound's weakness since the Brexit vote has made it more expensive to import gas, helping the case for shale gas which had been hurt in the past by weak oil prices and by opposition to planning approval from local campaigners.